nep-geo New Economics Papers
on Economic Geography
Issue of 2013‒04‒06
nineteen papers chosen by
Andreas Koch
Institute for Applied Economic Research

  1. Spatial migration By Carmen Camacho
  2. Agglomeration and firm-level productivity : a Bayesian spatial approach By Hashiguchi, Yoshihiro; Tanaka, Kiyoyasu
  3. Technological interdependence between south american countries : a spatial panel data growth model By Carolina Guevara; Corinne Autant-Bernard
  4. Factors behind international relocation and changes in production geography in the European automobile components industry By Lampón, Jesús F.; Lago-Peñas, Santiago
  5. The Effect of Migration and Spatial Connectivity on Regional Skill Endowments across Europe: 1988-2010 By Tani, Massimiliano; Manuguerra, Maurizio
  6. Role of Inter-firm Transactions on Industrial Agglomeration: Evidence from Japanese firm-level data By NAKAJIMA Kentaro; SAITO Yukiko; UESUGI Iichiro
  7. The economic geography of Europe and the role of regional policy By Julian Hinz
  8. Network Formation and Geography : Modelling Approaches, Underlying Conceptions, Recent and Promising Extensions By Corinne Autant-Bernard; Cilem Selin Hazir
  9. The Price of Distance: Producer Heterogeneity, Pricing to Market, and Geographic Barriers By Kano, Kazuko; Kano, Takashi; Takechi, Kazutaka
  10. Globalization, female employment, and regional differences in OECD countries By Fischer, Justina A.V.
  11. Where in cities do "rich" and "poor" people live? The urban economics model revisited By Rémi Lemoy; Charles Raux; Pablo Jensen
  12. Needs-Based Targeting or Favoritism? The Regional Allocation of Multilateral Aid within Recipient Countries By Hannes Öhler; Peter Nunnenkamp
  13. Logistics Infrastructure and the International Location of Fragmented Production By Blyde, Juan; Molina, Danielken
  14. Economic integration, location of industries, and frontier regions : evidence from Cambodia By Kuroiwa, Ikuo; Tsubota, Kenmei
  15. Persistence of regional inequality in China By Christopher Candelaria; Mary Daly; Galina Hale
  16. Local Deficits and Local Jobs: Can U.S. States Stabilize Their Own Economies? By Gerald Carlino; Robert P. Inman
  17. Productivity As If Space Mattered: An Application to Factor Markets Across China By Cheng, Wenya; Morrow, John; Tacharoen, Kitjawat
  18. Using Lasso-Type Penalties to Model Time-Varying Covariate Effects in Panel Data Regressions – A Novel Approach Illustrated by the ‘Death of Distance’ in International Trade By Hess, Wolfgang; Persson, Maria; Rubenbauer, Stephanie; Gertheiss, Jan

  1. By: Carmen Camacho (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)
    Abstract: We develop a model economy adapting Hotelling's migration law to make individuals react to the gradient of their indirect utility. In a first version, individuals respond uniquely to utility differences. In a second phase, we insert our migration law as a dynamic constraint in a spatial model of economic growth in which a policy maker maximizes overall welfare. In both cases we prove the existence of a unique solution under certain assumptions and for each initial distribution of human capital. We illustrate some extremely interesting properties of the economy and the associated population dynamics through numerical simulations. In the decentralized case in which a region enjoys a temporal technological advantage, an agglomeration in human capital emerges in the central area, which does not coincide with the technologically advanced area. In the complete model, initial differences in human capital can trigger everlasting inequalities in physical capital.
    Keywords: Migration; spatial dynamics; economic growth; parabolic PDE; optimal control
    Date: 2013–02
  2. By: Hashiguchi, Yoshihiro; Tanaka, Kiyoyasu
    Abstract: This paper estimates the impact of industrial agglomeration on firm-level productivity in Chinese manufacturing sectors. To account for spatial autocorrelation across regions, we formulate a hierarchical spatial model at the firm level and develop a Bayesian estimation algorithm. A Bayesian instrumental-variables approach is used to address endogeneity bias of agglomeration. Robust to these potential biases, we find that agglomeration of the same industry (i.e. localization) has a productivity-boosting effect, but agglomeration of urban population (i.e. urbanization) has no such effects. Additionally, the localization effects increase with educational levels of employees and the share of intermediate inputs in gross output. These results may suggest that agglomeration externalities occur through knowledge spillovers and input sharing among firms producing similar manufactures.
    Keywords: China, Industrial policy, Manufacturing industries, Productivity, Local economy, Agglomeration economies, Spatial autocorrelation, Bayes, Chinese firm-level data, GIS
    JEL: C21 C51 R10 R15
    Date: 2013–03
  3. By: Carolina Guevara (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Corinne Autant-Bernard (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: This study examines how the dissemination of research and development (R&D) and technology affected economic performance in different South American countries from 1990 to 2010. The objective is to understand the relationship between countries in the process of international technology diffusion, i.e. measuring externalities and identifying the mechanisms through which technology is transferred. To answer these questions, we consider the Schumpeterian growth model proposed by Ertur and Koch (2011). This framework accounts for the interdependences between countries (resulting from R&D externalities) from both a theoretical and an empirical point of view. With this spatial panel model, we assess the extent to which one country's productivity affects the productivity of other countries in the region and test the effectiveness of R&D in terms of direct and indirect impact on the economy. Different specifications of the spatial weight matrix are considered in order to investigate the different mechanisms of technological diffusion. The originality of this study lies firstly through the use of R&D measures that allow different sources of funding to be distinguished. In particular, we can thus assess the role of R&D expenditure from national sources in comparison with R&D expenditure from foreign sources which, in the context of developing countries, is a key issue. In addition, we provide an assessment of the role of absorptive capacity in terms of research expenditure or investment in human capital on the productivity levels of countries in the region. The results suggest that of the various factors determining South America's economic performance, public sector funded R&D investments and, to a lesser extent, private sector funded R&D, have a positive impact on these countries' productivity. In contrast, however, foreign investment in research does not produce the expected benefits. We also observe that there are significant international spillovers from R&D activities. The ability to disseminate technologies and to take advantage of these international spillovers, however, differs from one country to another. Our estimates indicate that Brazil has positioned itself as the main actor in the region in terms of technological diffusion, while Bolivia is the country most likely to benefit from these spillover effects.
    Keywords: Total Factor Productivity ; Technology diffusion ; spatial panel model
    Date: 2013–03–22
  4. By: Lampón, Jesús F.; Lago-Peñas, Santiago
    Abstract: This article analyses business strategies in the automobile sector to determine the key factors behind production relocation processes in automobile components suppliers. These factors help explain changes in production geography in the sector not only in terms of location advantages but also from a perspective of corporate strategies and decision-making mechanisms within firms. The results obtained from an empirical study in Spain during the period 2001-2008 show how the components sector has used relocation to meet the requirements for efficiency imposed by automobile manufacturers. The search for lower labour costs, production concentration and specialisation in order to obtain economies of scale and improved productivity are found to be the main factors determining relocation in the sector. These processes are facilitated by the operational flexibility of the multinational firms that dominate the sector which allows them to transfer resources internationally. Lean supply, technological requirements for production processes and the integration of production plants in the institutional environment are the main barriers to such processes of mobility, and may also determine the geographical destination of migrated production.
    Keywords: Production relocation, automobile components sector, geography, Spain, Europe
    JEL: F22 L6 L62
    Date: 2013–03–29
  5. By: Tani, Massimiliano (Macquarie University, Sydney); Manuguerra, Maurizio (Macquarie University, Sydney)
    Abstract: This paper investigates the effects of labour migration and openness to trade on regional skill endowments across the European Union at a time of increased economic integration. Using regional data from Eurostat's Regio database and the open web source Openflight for the period 1998-2010 we test whether the spatial concentration of skills has increased or decreased over time. We account for neighboring effects associated with both geographic proximity and links through civilian flights using a random spatial effect model. We find that migration contributes to convergence in regional skill endowments across member states, particularly at the Southern and Eastern periphery of the European Union. We also find that inter-regional connectivity through civilian flights has much stronger effects on the evolution of a region's skill endowment than geographic contiguity.
    Keywords: European Union, migration, skill endowments, convergence, spatial connectivity
    JEL: F20 J61
    Date: 2013–03
  6. By: NAKAJIMA Kentaro; SAITO Yukiko; UESUGI Iichiro
    Abstract: This paper investigates the role of inter-firm transaction structure on industrial agglomeration by using Japanese firm-level transaction relationship data. First, we measure the industrial agglomeration for each industry. Next, we measure the intensity of transactions and inequalities of transaction partners as the measures of the micro structure of transaction networks in each industry. Then, we regress the index of agglomeration by the indexes of transaction structure. We find that the intensity of intra-industry transactions statistically enforces the agglomeration. Further, the inequality of transaction partners has a negative effect on the agglomeration. This suggests that the industries that attract a few hub-firms have a large number of intra-industry transaction partners that are not agglomerated.
    Date: 2013–03
  7. By: Julian Hinz (UP1 UFR02 - Université Paris 1, Panthéon-Sorbonne - UFR d'Économie - Université Paris I - Panthéon-Sorbonne)
    Abstract: In this thesis, I set up a standard New Economic Geography model and estimate it in the regional context of the European Union. The analysis underlines the clear core-periphery structure of Europe, but also identifies forces that hint at a catching-up of lesser developed peripheral regions. While regions that are close to the geographic center on average have a much higher market access, regions far from the center can improve their market access over the time period of 1999-2009 relative to their initial position. I estimate and evaluate the impact of European Union Cohesion Policy on this process and do not find the positive developments to be caused by or connected to the financial facilities of the European Union Regional Policy.
    Date: 2012–06
  8. By: Corinne Autant-Bernard (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Cilem Selin Hazir (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: Due to the strong polarisation of economic activities in space and rise in collaborative behaviour, increasing attention has recently been devoted to the relationship between geography and network formation. The studies conducted on this topic reveal a high variation in terms of methodologies. Putting special emphasis on R&D networks, the aim of this chapter is to review the different methods and assess their ability to address the issues raised by the relationship between network and space. We first discuss the different facets of the relationship between geography and networks. Then, we detail the methodological approaches and their capability to test each effect of geography on network formation. We argue that the effect of distance on dyads have received the major attention so far, but the development of block modelling and top-down approaches opens new research perspectives on how distance or location might affect formation of more complex structures. Moreover, recent improvement in temporal models also offers also offers opportunities to better separate spatial effects from that of influence over time.
    Keywords: Social Network Analysis ; Stochastic Actor-based Models ; Gravity models ; Complex Network Analysis ; ERG ; Preferential Attachment Model
    Date: 2013–03–22
  9. By: Kano, Kazuko; Kano, Takashi; Takechi, Kazutaka
    Abstract: This study investigates the effect of distance on price differentials across regions. To identify the distance effect, we need to incorporate producer heterogeneity and pricing-to-market behavior. Because geographic barriers alter the threshold levels of productivity to set a positive price across markets, the effect of distance on price differentials can be underestimated if heterogeneity and pricing to market are not accounted for. By incorporating these factors, empirical analysis using micro-level data reveals that the distance effect is significantly large, suggesting that the price of geographic barriers is still high for regional transportation.
    Keywords: Law of one price, Transportation costs, Geographic barriers, Producer heterogeneity, Pricing to market
    JEL: F11 F14 F41
    Date: 2013–03
  10. By: Fischer, Justina A.V.
    Abstract: Accounting for within-country spatial differences is a much neglected issue in many cross-country comparisons. This paper highlights this importance in this empirical analysis of the impact of a country’s degree of social and economic globalization on female employment in 33 OECD countries, using a pseudo micro panel on 110’000 persons from the World Values Survey, 1981 to 2008. A traditional cross-country analysis suggests that only the social dimension of globalization, the worldwide information exchange, increases employment probabilities of women. However, when accounting for sub-national regional differences, the social dimension of globalization appears to work at the regional level only, while economic globalization (trade) increases female employment in a cross-country fashion.
    Keywords: Globalization; economic integration; labor market; employment; regions; social norms; communication; discrimination; gender; World Values Survey
    JEL: C33 D83 F14 F16 J16 J7 R23 Z13
    Date: 2013–04–02
  11. By: Rémi Lemoy (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - École Nationale des Travaux Publics de l'État [ENTPE] - Université Lumière - Lyon II, IXXI - Institut Rhône-Alpin des systèmes complexes - INRIA - École Normale Supérieure - Lyon - Institut National des Sciences Appliquées (INSA) - Lyon - Université Claude Bernard - Lyon I - Université Joseph Fourier - Grenoble I - CNRS - IRD, Phys-ENS - Laboratoire de Physique de l'ENS Lyon - CNRS : UMR5672 - École Normale Supérieure - Lyon); Charles Raux (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - École Nationale des Travaux Publics de l'État [ENTPE] - Université Lumière - Lyon II, IXXI - Institut Rhône-Alpin des systèmes complexes - INRIA - École Normale Supérieure - Lyon - Institut National des Sciences Appliquées (INSA) - Lyon - Université Claude Bernard - Lyon I - Université Joseph Fourier - Grenoble I - CNRS - IRD); Pablo Jensen (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - École Nationale des Travaux Publics de l'État [ENTPE] - Université Lumière - Lyon II, IXXI - Institut Rhône-Alpin des systèmes complexes - INRIA - École Normale Supérieure - Lyon - Institut National des Sciences Appliquées (INSA) - Lyon - Université Claude Bernard - Lyon I - Université Joseph Fourier - Grenoble I - CNRS - IRD, Phys-ENS - Laboratoire de Physique de l'ENS Lyon - CNRS : UMR5672 - École Normale Supérieure - Lyon)
    Abstract: We exploit the power of the Alonso-Mills-Muth (AMM) urban economics model and show that various utility functions and plausible conditions offer alternative explanations of households' location by income within a city. These include the existence of a "rich" center and more complex socio-spatial urban forms for instance alternating a rich center, poor suburbs and a rich outer ring, which have not yet been derived from the AMM model to our knowledge. In doing so we combine analytical ideas and illustrations by the means of an agent-based model. The hypothesis of a central or non-central amenity is also studied, leading to different insights on the issue.
    Keywords: urban economics ; location choice ; income ; amenity ; agent-based model
    Date: 2013–03–27
  12. By: Hannes Öhler; Peter Nunnenkamp
    Abstract: The regional allocation of aid within recipient countries has been largely ignored in the aid allocation literature. We use geocoded data on the location of aid projects financed by the World Bank and the African Development Bank within a sample of 27 recipient countries to assess the claim of donors that their aid targets needy population segments. We also assess whether political leaders in these countries direct aid funds to their home region, irrespective of regional needs. We do not find that the multilateral aid institutions take regional needs into account. Instead, favoritism appears to play an important role for location choices, in particular for physical infrastructure projects
    Keywords: aid allocation, within-country targeting, favoritism, World Bank, African Development Bank
    JEL: F35 F53
    Date: 2013–03
  13. By: Blyde, Juan; Molina, Danielken
    Abstract: Casual evidence suggests that multinational companies increasingly look for places with adequate transport and logistics infrastructure to locate affiliates that participate in cross-border production sharing. Yet, there are no systematic empirical analyses examining how logistics infrastructure interacts with the location decisions made by multinationals. Most studies on the determinants of FDI address the issue of transportation-logistics by examining the impact of distance on the relevant outcome, but distance does not capture by itself the quality of the logistics systems in place. An additional challenge is that investments in logistics infrastructure and FDI flows could be potentially endogenous. We overcome these shortcomings in the literature by embedding indicators of infrastructure into an empirical framework that examines whether countries with adequate logistics systems attract more vertical FDI in industries that are more dependent on logistics services. We find that logistics infrastructure positively impacts vertical FDI in addition to the impact typically found on distance. A change from the first quartile to the third quartile of the distribution of logistics infrastructure is associated with an average increase in the number of vertically-integrated subsidiaries equivalent to 15 percent
    Keywords: international production networks, vertical FDI, logistics infrastructure
    JEL: F10 F23 L23
    Date: 2013–03–31
  14. By: Kuroiwa, Ikuo; Tsubota, Kenmei
    Abstract: We examine changes in the location of economic activity in Cambodia between 1998 and 2008 in terms of employment growth. During this period, Cambodia joined ASEAN and increased trade with neighboring countries. Drawing on the predictions of the new economic geography, we focus on frontier regions such as border regions and international port cities. We examine the changing state of manufacturing in Cambodia from its initial concentration in Greater Phnom Penh to its growth in the frontier regions. The results suggest that economic integration and concomitant trade linkages may lead to the industrial development of frontier regions as well as the metropolitan areas in Cambodia.
    Keywords: Cambodia, International economic integration, International trade, Economic geography, Economic integration, Trade liberalization, Frontier regions
    JEL: F15 F16 R12
    Date: 2013–03
  15. By: Christopher Candelaria; Mary Daly; Galina Hale
    Abstract: Regional inequality in China appears to be persistent and even growing in the last two decades. We study potential explanations for this phenomenon. After making adjustments for the difference in the cost of living across provinces, we find that some of the inequality in real wages could be attributed to differences in quality of labor, industry composition, labor supply elasticities, and geographical location of provinces. These factors, taken together, explain about half of the cross-province real wage difference. Interestingly, we find that inter-province redistribution did not help offset regional inequality during our sample period. We also demonstrate that inter-province migration, while driven in part by levels and changes in wage differences across provinces, does not offset these differences. These results imply that cross-province labor market mobility in China is still limited, which contributes to the persistence of cross-province wage differences.
    Keywords: China ; Wages ; Labor market ; Labor supply
    Date: 2013
  16. By: Gerald Carlino; Robert P. Inman
    Abstract: Using a sample of the 48 mainland U.S. states for the period 1973-2009, we study the ability of U.S. states to expand own state employment through the use of state deficit policies. The analysis allows for the facts that U.S. states are part of a wider monetary and economic union with free factor mobility across all states and that state residents and firms may purchase goods from “neighboring” states. Those purchases may generate economic spillovers across neighbors. Estimates suggest that states can increase own state employment by increasing their own deficits. There is evidence of spillovers to employment in neighboring states defined by common cyclical patterns among state economies. For large states, aggregate spillovers to its economic neighbors are approximately two-thirds of own state job growth. Because of significant spillovers and possible incentives to free-ride, there is a potential case to actively coordinate (i.e., centralize) the management of stabilization policies. Finally, job effects of a temporary increase in state own deficits persist for at most one to two years and there is evidence of negative job effects when these deficits are scheduled for repayment.
    JEL: E62 H74 H77 R23
    Date: 2013–03
  17. By: Cheng, Wenya; Morrow, John; Tacharoen, Kitjawat
    Abstract: Although firms are dispersed across space and may face radically different production conditions, this dimension of firm heterogeneity is often overlooked. Differences between factor markets, especially for labor, are stark. To pursue this line of inquiry, we model firm hiring across local labor markets. We then use the model to estimate and quantify the role of distinct regional labor markets in firm input use, productivity and location by combining firm and population census data. Considering modern China as a country with substantial regional variation, we find labor costs vary by 30-80%, leading to 3-17% differences in TFP once nonlabor inputs are considered. Favorably endowed regions attract more value added per capita, providing new insights into within-country comparative advantage and specialization.
    Keywords: General Equilibrium, Factor Endowments, Structural Estimation, Productivity.
    JEL: D5 F1 J3 O1
    Date: 2013–03
  18. By: Hess, Wolfgang (Lund University); Persson, Maria (Lund University); Rubenbauer, Stephanie (Ludwig-Maximilians-Universität Munich); Gertheiss, Jan (Ludwig-Maximilians-Universität Munich)
    Abstract: When analyzing panel data using regression models, it is often reasonable to allow for time-varying covariate effects. We propose a novel approach to modelling timevarying coefficients in panel data regressions, which is based on penalized regression techniques. To illustrate the usefulness of this approach, we revisit the well-known empirical puzzle of the ‘death of distance’ in international trade. We find significant differences between results obtained with the proposed estimator and those obtained with ‘traditional’ methods. The proposed method can also be used for model selection, and to allow covariate effects to vary over other dimensions than time.
    Keywords: Penalized Regression; Lasso-type Penalties; Varying Coefficient Models; Gravity; Death of Distance; Missing Globalization Puzzle
    JEL: C23 C52 F10
    Date: 2013–03–13
  19. By: Emilie-Pauline Gallié (IMRI, Université Paris Dauphine - Institut pour le management de la recherche et de l'innovation - Université Paris IX - Paris Dauphine); Anna Glaser (CERNA - Centre d'économie industrielle - MINES ParisTech - École nationale supérieure des mines de Paris); Frédérique Pallez (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: Dans ce volet de nos recherches sur l'évaluation des clusters, nous comparons quatre cas européens d'évaluation de clusters : Wallonie, Allemagne, Basse-Autriche et France. Nous développons d'abord une grille de lecture avec laquelle nous analysons ensuite ces différentes évaluations. Cette grille de lecture nous aide surtout à souligner les différences entre ces évaluations dans trois domaines: les objets de l'évaluation et l'imputabilité des résultats, la démarche et la méthodologie des évaluations, et les effets et usages des évaluations. En conclusion, à partir de ces cas empiriques, nous proposons de distinguer deux modèles idéaux typiques d'évaluation, qui combinent ces différentes caractéristiques de manière cohérente et renvoient à des usages très contrastés des évaluations : un modèle " économiste " et un modèle " gestionnaire ".
    Keywords: Politique publique ; évaluation ;pôle de compétitivité ; cluster
    Date: 2013–02–15

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